Tag: Financial Statements

Management Notes

Book Building Procedure for Issue of Shares

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Book building is a price discovery mechanism that is used in the stock markets while pricing securities for the first time. When shares are being offered for sale in an IPO, it can either be done at a fixed price. However, if the company is not sure about the exact price at which to market its shares, it can decide a price range instead of an exact figure. This process of discovering the price by providing the investors with a price range and then asking them to bid on it is called the book building process. It is considered to be one of the most efficient mechanisms of pricing securities in the primary market. This is the preferred method which is recommended by all major stock exchanges and as a result is followed in all major developed countries in the world.

Book Building Process:

  • Appointment of Investment Banker:

The first step starts with appointing the lead investment banker. The lead investment banker conducts due diligence. They propose the size of the capital issue that must be conducted by the company. Then they also propose a price band for the shares to be sold. If the management agrees with the propositions of the investment banker, the prospectus is issued with the price range as suggested by the investment banker. The lower end of the price range is known as the floor price whereas the higher end is known as the ceiling price. The final price at which securities are indeed offered for sale after the entire book building process is called the cut-off price.

  • Collecting Bids:

Investors in the market are requested to bid to buy the shares. They are requested to bid the number of shares that they are willing to buy at varying price levels. These bids along with the application money are supposed to be submitted to the investment bankers. It must be noted that it is not a single investment banker who is engaged in the collection of bids. Rather, the lead investment banker can appoint sub-agents to tap into their network especially for receiving the bids from a larger group of individuals.

  • Price Discovery:

Once all the bids have been aggregated by the lead investment banker, they begin the process of price discovery. The final price chosen in simply the weighted average of all the bids that have been received by the investment banker. This price is declared as the cut-off price. For any issue which has received substantial publicity and which is being anticipated by the public, the ceiling price is usually the cut-off price.

  • Publicizing:

In the interest of transparency, stock exchanges all over the world require that companies make public the details of the bids that were received by them. It is the lead investment banker’s duty to run advertisements containing the details of the bids received for the purchase of shares for a given period of time (let’s say a week). The regulators in many markets are also entitled to physically verify the bid applications if they wish to.

  • Settlement:

The application amount received from the various bidders has to be adjusted and shares have to be allotted. For instance, if a bidder has bid a lower price than the cut-off price then a call letter has to be sent asking for the balance money to be paid. On the other hand, if a bidder has bid a higher price than the cut-off, a refund cheque needs to be processed for them. The settlement process ensures that only the cut-off amount is collected from the investors in lieu of the shares sold to them.

Partial Book Building

Partial book building is another variation of the book building process. In this process, instead of inviting bids from the general population, investment bankers invite bids from certain leading institutions. Based on their bids, a weighted average of the prices is created and cut-off price is decided. This cut-off price is then offered to the retail investors as a fixed price. Therefore, the bidding only happens at an institutional level and not at a retail level.

This is also an efficient mechanism to discover prices. Also the cost and complications involved in conducting a partial book building are substantially low.

First of all, the book building process brings flexibility to the pricing of IPO’s. Prior to the introduction of book building, a lot of IPO’s were either underpriced or overpriced. This created problems because if the issue was underpriced, the company was losing possible capital. On the other hand, if the issue was overpriced it would not be fully subscribed. In fact, if it was subscribed below a given percentage, the issue of securities had to be cancelled and the substantial costs incurred over the issue would simply have to be written off. With the introduction of book building process, such events no longer happen and the primary market functions more efficiently.

Other Subtypes of Book Building

The following are subtypes of book building:

  • Accelerated Book Building

The companies can use an accelerated book-building process to acquire quick capital market. That can be the case when a company cannot finance its short-term project via debt financing. So, the issuing company contacts several investment banks that can act as underwriters the evening before the intended placement. Under this process, the offer period is open only for a day or two days, and you have no time for marketing for an issue. So, instead, the underwriter overnight contacts their networks and details the current topic to institutional investors. If this investor finds this issue interesting, then allotment happens overnight.

  • Partial Book Building

As the partial book building says, that issue book is built partially, where the investment banker only invites bids from the selected investors. Based on their bids, they take the weighted average of the prices to finalize the cut-off price. Then other investors, such as retail investors, take this cut-off price as a fixed price. So, the bidding happens with a selected group of investors under the partial book-building process.

Advantages of Book Building

  • The most efficient way to price the share in the IPO market.
  • The share price is finalized by investors’ aggregate demand, not by the fixed price set by the company management.

Disadvantages of Book Building

  • High costs are involved in the book-building process compared to the fixed-price mechanism.
  • The period is also more in the book booking process than the fixed-price mechanism.
Management Notes

Subscription of Shares, Minimum Subscription, Over-Subscription, Under Subscription

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Subscription of shares refers to the process where investors apply for shares issued by a company. When a company offers shares to the public through an Initial Public Offering (IPO) or other methods, investors submit applications to purchase them. Based on demand, the company may receive full, over, or under-subscription. Full subscription means the exact number of shares offered is applied for, over-subscription occurs when demand exceeds supply, and under-subscription happens when applications are fewer than the issued shares. Companies allocate shares based on predefined criteria, ensuring fair distribution among investors while adhering to regulatory guidelines.

Minimum Subscription of Shares:

The minimum subscription of shares refers to the minimum number of shares that a company must sell to raise a certain amount of capital to proceed with an issue, whether through an Initial Public Offering (IPO), Follow-on Public Offering (FPO), or any other public offering. This minimum subscription amount is typically defined in the prospectus and is a regulatory requirement, ensuring that the company has sufficient investor interest to justify proceeding with the issue.

In India, for instance, the minimum subscription requirement for public offerings is usually 90% of the total issue size. If the company fails to achieve this minimum subscription level, the issue is considered unsuccessful, and the funds collected (if any) must be refunded to the investors. This safeguard protects investors from getting involved in companies that may lack sufficient investor confidence or face difficulties in raising the required capital.

The concept of minimum subscription ensures that the company has a strong foundation of capital to fund its operations or expansion. It also prevents situations where the company might not have enough funds to cover operational or project expenses, thus providing a level of financial security.

Moreover, achieving minimum subscription enhances the credibility of the company in the eyes of investors and regulators, as it demonstrates market confidence in its business model and financial stability.

Over-Subscription of Shares:

Over-subscription occurs when the demand for shares in an initial public offering (IPO) or any other public share issue exceeds the number of shares offered by the company. This situation indicates high investor interest in the company’s shares, often due to favorable market conditions, strong company performance, or investor confidence in the business’s future prospects.

When an issue is over-subscribed, investors apply for more shares than what is available. For example, if a company issues 1,00,000 shares, and investors apply for 2,00,000 shares, the issue is considered over-subscribed by 100%. This scenario usually results in the company having to make decisions on how to allocate shares fairly among investors.

In cases of over-subscription, companies may use various methods to allocate shares, such as:

  1. Pro-rata Basis: Shares are allocated in proportion to the number of shares applied for by each investor. If an investor applied for 100 shares and the issue was over-subscribed by 2:1, they would receive only 50 shares.

  2. Lottery System: In some cases, especially when demand far exceeds supply, a lottery system is used to randomly allocate shares to applicants.

  3. First-Come, First-Served: Shares may be allotted based on the order in which applications are received, with early applications being given priority.

Under Subscription of Shares:

Under subscription occurs when a company issues shares to the public, but the total number of shares applied for is less than the number offered. This indicates low investor demand, possibly due to high pricing, poor market conditions, or weak company reputation. Unlike oversubscription (excess demand), under subscription means the company fails to raise the intended capital.

To resolve this, companies may extend the subscription period, revise the offer price, or rely on underwriters (if any) to purchase the remaining shares. If the minimum subscription (as per regulatory requirements) is not met, the issue may be canceled, and application money refunded. Under subscription can negatively impact the company’s market perception and future fundraising prospects.

Features of Under Subscription:

  • Lower Capital Raised

Under subscription means the company cannot collect the full projected capital, forcing it to seek alternative funding (e.g., loans, private placements). This may delay expansion plans or increase financial risk due to reliance on debt.

  • Underwriter’s Role Becomes Critical

If shares are underwritten, the underwriter must purchase the unsubscribed shares, ensuring the company receives the intended funds. This safety net comes at a cost (underwriting commission).

  • Regulatory Compliance Issues

Companies must meet minimum subscription requirements (e.g., 90% in some jurisdictions). Failure may force refunds and cancellation, requiring re-filing with regulatory bodies (e.g., SEBI, SEC).

  • Negative Market Sentiment

Low subscription signals weak investor confidence, potentially lowering share prices in secondary markets. It may also affect future IPO prospects and credit ratings.

  • Extended or Revised Offer

Companies may reprice shares or extend the subscription period to attract investors. However, this delays capital availability and increases administrative costs.

  • Impact on Share Allotment

Since demand is below supply, all applicants receive full allotment (no proportional distribution). This contrasts with oversubscription, where allotment is partial.

Bangalore University BBA Notes

Elements of Cost Accounting Bangalore University BBA 3rd Semester NEP Notes

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Unit 1 introduction to Cost Accounting [Book]
Introduction, Meaning and Definitions of Cost, Costing and Cost Accounting VIEW
Need and Objective of Cost Accounting VIEW
Distinctions between Financial Accounting and Cost Accounting VIEW
Advantages and Limitations of Cost Accounting VIEW
Classification of Cost VIEW
Material Cost, Labor Cost VIEW
Overhead VIEW VIEW
Important terminologies: Cost Unit, Cost Center VIEW
Direct Cost, Indirect Cost, Prime Cost, Production Cost, Administration Cost, Selling and Distribution Cost, Fixed Cost, Variable Cost, Semi-variable Cost, Period Cost, Product Cost, Explicit Cost, Implicit Cost, Historical Cost, Current Cost, Future or Predetermined Cost, Opportunity Cost VIEW
Installation of Cost Accounting System VIEW
Features of good cost accounting system VIEW
Precautions for installing effective cost accounting system VIEW
Challenges in installing effective cost accounting system VIEW

 

Unit 2 Cost Sheet, Tenders & Quotations [Book]
Introduction, Meaning, Objectives and Contents of Cost Sheet VIEW
Problem on Preparation of Cost Sheet VIEW
Meaning of Tender & Quotation VIEW
Bases for preparation of Tenders & Quotations VIEW
Problems on preparation of Statement of Tender & Quotations, E-Tenders

 

Unit 3 Material Costing [Book]
Introduction, Meaning of Material Cost VIEW
Types of Materials: Direct Materials, Indirect Materials VIEW
Material Cost Control: Meaning, Objectives and Benefits VIEW
Scope of Material Cost Control VIEW VIEW
Procurement, Storage and Management of Issues VIEW VIEW VIEW
Make or Buy Decision VIEW
Purchase Process VIEW
Vendor Selection
Economic Order Quantity. Problems on EOQ VIEW
Methods of Stores or Inventory Control: VIEW
ABC Method VIEW
VED Method VIEW
FSN Method VIEW
Determination of Stock Levels: Reorder Level, Minimum Level, Maximum Level, Average Level and Danger Level VIEW
Duties and Responsibilities of Stores Manager VIEW
Pricing of Material Issues:
Specific Price Method VIEW
First-In- First-Out Method (FIFO) VIEW
Last-In-Last-Out Method (LIFO) VIEW
Highest-In-First-Out Method (HIFO) VIEW
Simple Average Method VIEW
Weighted Average Method VIEW
Base Stock Method VIEW
Replacement Cost Method VIEW
Realizable Price Method, Standard Price Method, Inflated Price Method VIEW
Problems under First-In-First-Out Method (FIFO), Last-In-Last-Out Method (LIFO)  
Simple Average Method VIEW
Weighted Average Method VIEW

 

Unit 4 Labour Costing [Book]
Introduction, Meaning of Labour Cost VIEW
Types of Labour: Direct Labour VIEW
Indirect Labour VIEW
Labour Cost Control: Meaning, Objectives and Benefits VIEW
Scope of Labour Cost Control:
Departments involved VIEW
Time Analysis or Work Study VIEW VIEW
Time Keeping and Time Booking, Payroll Procedure, Idle Time, Over Time VIEW
Labour Turnover VIEW
Wage and Incentive Systems: VIEW
Simple Time Rate System, Straight Piece Rate System VIEW
Taylor’s, Merrick’s, Halsey, Rowan Differential Piece Rate System VIEW
Job Evaluation VIEW
Merit Rating VIEW
Labour Productivity VIEW
Problems on calculation of Labor Cost
Overtime Wages and Wage and Incentive Systems VIEW

 

Unit 5 Overhead Costing [Book]
Introduction, Meaning of Overhead VIEW
VIEW
Classification of Overhead: Factory Overhead, Administrative Overhead, Selling Overhead, Distribution Overhead, Research and Development Overhead VIEW
Accounting and Control of Overheads VIEW
Cost Allocation VIEW
Cost Apportionment VIEW
Methods of Cost Re-apportionment: Direct Method, Step-ladder Method, Repeated Distribution Method, Simultaneous Equation Method VIEW
Problems on Apportionment of production overheads VIEW
Problems on Re-apportionment of production overheads under Direct Method and Simultaneous Method VIEW

Other Notes

Meaning of reconciliation VIEW
Reasons for differences in Profits under Financial and Cost Accounts VIEW
Procedure for Reconciliation:
Ascertainment of Profits as per Financial Accounts and Cost Accounts VIEW
Reconciliation of Profits of both sets of Accounts VIEW
Preparation of Reconciliation Statement VIEW
Bangalore University B.com Notes

Cost Accounting Bangalore University B.COM 4th Semester NEP Notes

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Unit 1 introduction to Cost Accounting [Book]
Introduction, Meaning and Definitions of Cost, Costing and Cost Accounting VIEW
Need and Objective of Cost Accounting VIEW
Distinctions between Financial Accounting and Cost Accounting VIEW
Advantages and Limitations of Cost Accounting VIEW
Classification of Cost VIEW
Material Cost, Labor Cost VIEW
Overhead VIEW VIEW
Important terminologies: Cost Unit, Cost Center VIEW
Direct Cost, Indirect Cost, Prime Cost, Production Cost, Administration Cost, Selling and Distribution Cost, Fixed Cost, Variable Cost, Semi-variable Cost, Period Cost, Product Cost, Explicit Cost, Implicit Cost, Historical Cost, Current Cost, Future or Predetermined Cost, Opportunity Cost VIEW
Installation of Cost Accounting System VIEW
Features of good cost accounting system VIEW
Precautions for installing effective cost accounting system VIEW
Challenges in installing effective cost accounting system VIEW

 

Unit 2 Cost Sheet, Tenders & Quotations [Book]
Introduction, Meaning, Objectives and Contents of Cost Sheet VIEW
Problem on Preparation of Cost Sheet VIEW
Meaning of Tender & Quotation VIEW
Bases for preparation of Tenders & Quotations VIEW
Problems on preparation of Statement of Tender & Quotations, E-Tenders

 

Unit 3 Material Costing [Book]
Introduction, Meaning of Material Cost VIEW
Types of Materials: Direct Materials, Indirect Materials VIEW
Material Cost Control: Meaning, Objectives and Benefits VIEW
Scope of Material Cost Control VIEW VIEW
Procurement, Storage and Management of Issues VIEW VIEW VIEW
Make or Buy Decision VIEW
Purchase Process VIEW
Vendor Selection
Economic Order Quantity. Problems on EOQ VIEW
Methods of Stores or Inventory Control: VIEW
ABC Method VIEW
VED Method VIEW
FSN Method VIEW
Determination of Stock Levels: Reorder Level, Minimum Level, Maximum Level, Average Level and Danger Level VIEW
Duties and Responsibilities of Stores Manager VIEW
Pricing of Material Issues:
Specific Price Method VIEW
First-In- First-Out Method (FIFO) VIEW
Last-In-Last-Out Method (LIFO) VIEW
Highest-In-First-Out Method (HIFO) VIEW
Simple Average Method VIEW
Weighted Average Method VIEW
Base Stock Method VIEW
Replacement Cost Method VIEW
Realizable Price Method, Standard Price Method, Inflated Price Method VIEW
Problems under First-In-First-Out Method (FIFO), Last-In-Last-Out Method (LIFO)  
Simple Average Method VIEW
Weighted Average Method VIEW

 

Unit 4 Labour Costing [Book]
Introduction, Meaning of Labour Cost VIEW
Types of Labour: Direct Labour VIEW
Indirect Labour VIEW
Labour Cost Control: Meaning, Objectives and Benefits VIEW
Scope of Labour Cost Control:
Departments involved VIEW
Time Analysis or Work Study VIEW VIEW
Time Keeping and Time Booking, Payroll Procedure, Idle Time, Over Time VIEW
Labour Turnover VIEW
Wage and Incentive Systems: VIEW
Simple Time Rate System, Straight Piece Rate System VIEW
Taylor’s, Merrick’s, Halsey, Rowan Differential Piece Rate System VIEW
Job Evaluation VIEW
Merit Rating VIEW
Labour Productivity VIEW
Problems on calculation of Labor Cost
Overtime Wages and Wage and Incentive Systems VIEW

 

Unit 5 Overhead Costing [Book]
Overhead Costing Introduction VIEW VIEW
Meaning of reconciliation VIEW
Reasons for differences in Profits under Financial and Cost Accounts VIEW
Procedure for Reconciliation:
Ascertainment of Profits as per Financial Accounts and Cost Accounts VIEW
Reconciliation of Profits of both sets of Accounts VIEW
Preparation of Reconciliation Statement VIEW
Bangalore University B.com Notes

Company Law and Administration Bangalore University B.com 3rd Semester NEP Notes

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Unit 1 Indian Companies Act 2013 [Book]
Introduction to Company Law, Evolution VIEW VIEW
Nature of Joint Stock Company VIEW VIEW
Overview of Companies Act 2013, Objectives, Significance of Companies Act 2013 VIEW
Body Corporate Meaning, Features VIEW
Classification of Companies VIEW
Distinction between Private Company and Public Company VIEW
Doctrine of Lifting the veil of Corporate entity VIEW
CSR Meaning, Scope VIEW
Provisions for CSR Activities under Schedule VII of the Companies Act 2013 VIEW

 

Unit 2 Formation of a New Company [Book]
Stages in Formation of a company as per Companies Act 2013 VIEW
Documents required for the formation of company VIEW
Memorandum of Association Meaning, Definition, Purpose and Content of Memorandum of Association VIEW
Articles of Association: Meaning, Definition, Contents and Alteration of Articles of Association VIEW
Distinction between Memorandum of Association and Articles of Association VIEW
Doctrine of Ultravires VIEW
Doctrine of Constructive notice and Doctrine of Indoor Management VIEW
Prospectus Meaning, Definition, Contents VIEW
Types and Registration of Prospectus VIEW
Statement in lieu VIEW
Misstatement in prospectus and its consequences VIEW

 

Unit 3 Capital Structure and Accounts of Companies [Book]
Share Capital Meaning, Definition VIEW
Types of Share Capital VIEW VIEW
Rules Regarding Issue of Shares VIEW
Distinction between Preference shares and equity shares VIEW
Debenture Meaning, Definition, Types VIEW
Rules Regarding Issue of Debenture VIEW VIEW VIEW
Distinction between Share and Debenture VIEW
Accounts of companies: Statutory books and Financial Statements VIEW

 

Unit 4 Administrative and Managerial role of a Company [Book]
Overview of Administrative and Managerial role, Key Managerial Personnel: VIEW
Director Meaning, Definition, Director Identification Number, Position, Rights VIEW
Director Liabilities VIEW
Director Duties, Power VIEW
Director Qualification, Disqualification VIEW
Director Appointment, Removal and Resignation of director VIEW
Meaning and role of Managing Director VIEW
Whole Time Directors VIEW
C-suite Executives, CEO, CFO, COO, CTO, CKO, CRO and CIO VIEW
Resident Director, Independent Director VIEW
Women Director VIEW
Company Secretary Meaning, Definition, Appointment of Company Secretary, Functions of CS, Duties and Responsibilities VIEW
VIEW
Audit Committee: Meaning and Functions of Audit Committee VIEW
VIEW

 

Unit 5 Corporate Meeting [Book]
Introduction to Corporate Meeting Meaning, Definitions and Types VIEW
VIEW
Proceedings under Section 118 of the Companies Act 2013 VIEW
Requisite of Valid Meeting:
Notice VIEW VIEW
Agenda VIEW
Chairman VIEW VIEW
Quorum VIEW
Proxy VIEW
Resolutions VIEW
Minutes VIEW
Postal Ballot, E- voting VIEW
Video Conferencing VIEW
Board of Directors (BODs) Meaning, Definitions, Board Meeting, Committee Meeting VIEW
Meeting of Board of Directors (BODs) VIEW
Winding Up of Company Meaning, Definition and Modes of Winding up VIEW
Official Liquidator Meaning, Powers and Duties VIEW
Consequences of Winding up of a Company VIEW
Bangalore University B.com Notes

Corporate Accounting Bangalore University B.com 3rd Semester NEP Notes

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Unit 1 Issue of Shares [Book]
Shares Introduction, Meaning, features VIEW
Types of shares VIEW
Issue of shares VIEW VIEW
Subscription of shares, Minimum subscription, Over subscription VIEW
Pro-Rata allotment of Shares VIEW
Book Building procedure for issue of shares VIEW
Problems related to Journal entries on issue of shares at par, premium and discount VIEW
Unit 2 Underwriting of Shares [Book]
Introduction, Meaning and Need for underwriting VIEW
Advantages of Underwriting VIEW
SEBI Regulations regarding Underwriting VIEW
Underwriting Agreement VIEW
Underwriting Commission VIEW
Underwriter, Functions of Underwriter VIEW
Types of Underwriting VIEW
Marked and Unmarked Applications VIEW
Problems on determination of Liability of Underwriters VIEW
Underwriting Process VIEW
Unit 3 Valuation of Goodwill [Book]
Meaning, Circumstances, Factors of Valuation of Goodwill VIEW
Methods of Valuation of Goodwill:
Average Profit Method of Valuation of Goodwill VIEW
Super Profit Method of Valuation of Goodwill VIEW
Capitalization of Super Profit average Profit Method of Valuation of Goodwill VIEW
Annuity Method of Valuation of Goodwill VIEW
Capitalization of Profit Method VIEW
Annuity Method VIEW
Brand Meaning and features VIEW VIEW
Factors influencing value of brand VIEW
Circumstances of valuation of brand VIEW
Intellectual Property Rights (IPR): Meaning and features VIEW
Factors influencing value of IPR VIEW
Circumstances of valuation of IPR VIEW
Patents Meaning and features VIEW VIEW
Factors influencing value of patents VIEW
Circumstances of valuation of patent VIEW
Unit 4 Valuation of Shares [Book]
Meaning, Need for Valuation of Shares VIEW
Factors Affecting Valuation of Shares VIEW
Methods of Valuation:
Intrinsic Value Method of Shares VIEW
Yield Method of Shares VIEW
Earning Capacity Method of Shares VIEW
Fair Value of shares VIEW
Rights Issue VIEW
Valuation of Rights Issue VIEW
Valuation of Share Warrant VIEW
Unit 5 Company Final Accounts [Book]
Statutory Provisions regarding preparation of Company Final Accounts VIEW
Treatment of Special Items VIEW
Tax deducted at source VIEW
Advance payment of Tax VIEW
Provision for Tax VIEW
Depreciation VIEW
Interest on debentures VIEW
Dividends VIEW
Rules regarding payment of dividends VIEW
Transfer to Reserves VIEW
Preparation of Profit and Loss Account and Balance Sheet in vertical form VIEW
Bangalore University B.com Notes

Advanced Accounting BU B.com Old Syllabus Notes

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Unit 1 [Book]  
Business of Banking companies VIEW
Some important provisions of Banking Regulation Act of 1949, Brokerage, Discounts, Statutory Reserves, Cash Reserves VIEW
Minimum capital and reserves, Restriction on commission VIEW
Books of accounts VIEW
Special features of bank accounting VIEW
Final Accounts, Balance Sheet and Profit and Loss account VIEW
  VIEW
Interest on Doubtful debts VIEW VIEW
Rebate on bill Discounted VIEW
Acceptance, Endorsement and Other obligations VIEW
Problems as per new provisions  

 

Unit 2 Accounts of Insurance Companies [Book]  
(a) Life insurance: Accounting concepts relating to life insurance companies VIEW
Preparation of Final accounts of life insurance companies VIEW
Revenue account and Balance sheet VIEW
(b) General insurance: Meaning accounting concepts VIEW
Preparation of Final accounts VIEW

 

Unit 3 Inflation Accounting [Book]  
Need, Meaning, definition Importance, Role, Objectives, Merits, and Demerits of Inflation Accounting VIEW
Problems on Current purchasing power method (CPP) VIEW
Current cost accounting method (CCA) VIEW

 

Unit 4 Farm Accounting [Book]  
Meaning, Need and Purpose, Characteristics of farm accounting VIEW
Nature of Transactions, Cost and revenue VIEW
Apportionment of common cost VIEW
By product costing VIEW
Farm Accounting, Recording of transactions, problems VIEW

 

Unit 5 Investment Accounting [Book]  
Introduction, Nature of Investment Accounting VIEW
Investment Ledger VIEW
Different terms used; Cum dividend or Interest and ex-dividend or interest VIEW
Securities VIEW VIEW
Bonus Shares VIEW VIEW
Right Shares VIEW VIEW
Procedures of Recording shares VIEW
Management Notes

Director General of Employment and Training

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The organization primarily looks after the operation of employment exchanges, industrial training institutes, vocational guidance programme and some other institutions. The activities of the directorate are essentially governed by the policies, standards and procedures set by the central directorate general, employment and training. Other activities of the organization include employment market information, vocational rehabilitation centers, and training of handicapped groups such as women and physically handicapped. The training wing of the department also looks after the implementation of the apprentices act, 1961. Generally, the directorate functions independently of the organizing of labour commissioner.

Management Notes

Director General of Factory Advice Service

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The office of the Chief Adviser of factories, which is now called Directorate General, Factory Advice Service and Labour Institutes, was setup in 1945 with the objective of advising Central and State Governments on administration of the Factories Act and coordinating the factory inspection services in the States. The Directorate General, Factory Advice and Labour Institutes (DGFASLI) comprises:

  • Headquarters situated in Mumbai
  • Central Labour Institute in Mumbai
  • Regional Labour Institutes in Chennai, Kanpur, Kolkata and Faridabad.

The DGFASLI is an attached office of the Ministry of Labour & Employment, Government of India and serves as a technical arm to assist the Ministry in formulating national policies on occupational safety and health in factories and docks. It also advises factories on various problems concerning safety, health, efficiency and well – being of the persons at work places.

Objectives of DGFASLI

  • To provide technical advice and service to the Central and State Governments, and workplaces including factories and ports on matters related to safety, health and welfare of workers.
  • To develop legislations, standards, guidelines and codes of practices consistent with international instruments/standards on Safety, Health and Environment at workplaces.
  • To conduct studies, surveys and audits in the field of Occupational Safety and Health (OSH)
  • To enforce and promote Safety, Health and Environment in major ports in India.
  • To become a national repository of information on OSH and to promote OSH at workplaces.
  • To conduct seminars, workshops and training programmes on OSH
  • To encourage and provide best practices in the field of OSH.
  • To establish and develop research and development in the area of OSH and risk management.
  • To operate Award Schemes such as PMSA, VRP and NSA
Management Notes

Disclosure of different Categories of financial assets and financial liabilities in the Balance sheet and Profit and Loss Account

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Significance of financial instruments for financial position and performance

An entity shall disclose information that enables users of its financial statements to evaluate the significance of financial instruments for its financial position and performance.

Balance sheet

Categories of financial assets and financial liabilities

The carrying amounts of each of the following categories, as defined in Ind AS 39, shall be disclosed either in the balance sheet or in the notes:

(a) financial assets at fair value through profit or loss, showing separately (i) those designated as such upon initial recognition and (ii) those classified as held for trading in accordance with Ind AS 39;

(b) Held-to-maturity investments;

(c) Loans and receivables;

(d) available-for-sale financial assets;

(e) financial liabilities at fair value through profit or loss, showing separately (i) those designated as such upon initial recognition and (ii) those classified as held for trading in accordance with Ind AS 39; and

(f) Financial liabilities measured at amortised cost.

Financial assets or financial liabilities at fair value through profit or loss

If the entity has designated a loan or receivable (or group of loans or receivables) as at fair value through profit or loss, it shall disclose:

(a) The maximum exposure to credit risk (see paragraph 36(a)) of the loan or receivable (or group of loans or receivables) at the end of the reporting period.

(b) The amount by which any related credit derivatives or similar instruments mitigate that maximum exposure to credit risk.

(c) The amount of change, during the period and cumulatively, in the fair value of the loan or receivable (or group of loans or receivables) that is attributable to changes in the credit risk of the financial asset determined either:

(i) As the amount of change in its fair value that is not attributable to changes in market conditions that give rise to market risk; or

(ii) Using an alternative method the entity believes more faithfully represents the amount of change in its fair value that is attributable to changes in the credit risk of the asset.

Changes in market conditions that give rise to market risk include changes in an observed (benchmark) interest rate, commodity price, foreign exchange rate or index of prices or rates.

(d) The amount of the change in the fair value of any related credit derivatives or similar instruments that has occurred during the period and cumulatively since the loan or receivable was designated.

If the entity has designated a financial liability as at fair value through profit or loss in accordance with paragraph 9 of Ind AS 39, it shall disclose:

(a) The amount of change, during the period and cumulatively, in the fair value of the financial liability that is attributable to changes in the credit risk of that liability determined either:

(i) As the amount of change in its fair value that is not attributable to changes in market conditions that give rise to market risk (see Appendix B, paragraph B4); or

(ii) Using an alternative method the entity believes more faithfully represents the amount of change in its fair value that is attributable to changes in the credit risk of the liability.

Changes in market conditions that give rise to market risk include changes in a benchmark interest rate, the price of another entities financial instrument, a 5

Commodity price, a foreign exchange rate or an index of prices or rates. For contracts that include a unit-linking feature, changes in market conditions include changes in the performance of the related internal or external investment fund.

(b) The difference between the financial liabilities carrying amount and the amount the entity would be contractually required to pay at maturity to the holder of the obligation.

The entity shall disclose:

(a) The methods used to comply with the requirements in paragraphs 9(c) and 10(a).

(b) If the entity believes that the disclosure it has given to comply with the requirements in paragraph 9(c) or 10(a) does not faithfully represent the change in the fair value of the financial asset or financial liability attributable to changes in its credit risk, the reasons for reaching this conclusion and the factors it believes are relevant.

Reclassification

If the entity has reclassified a financial asset (in accordance with paragraphs 5154 of Ind AS 39) as one measured:

(a) At cost or amortised cost, rather than at fair value; or

(b) At fair value, rather than at cost or amortised cost,

It shall disclose the amount reclassified into and out of each category and the reason for that reclassification.

12A. if the entity has reclassified a financial asset out of the fair value through profit or loss category in accordance with paragraph 50B or 50D of Ind AS 39 or out of the available-for-sale category in accordance with paragraph 50E of Ind AS 39, it shall disclose:

(a) The amount reclassified into and out of each category;

(b) For each reporting period until derecognition, the carrying amounts and fair values of all financial assets that have been reclassified in the current and previous reporting periods;

(c) If a financial asset was reclassified in accordance with paragraph 50B, the rare situation, and the facts and circumstances indicating that the situation was rare;

(d) for the reporting period when the financial asset was reclassified, the fair value gain or loss on the financial asset recognised in profit or loss or other comprehensive income in that reporting period and in the previous reporting period;

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